Q4 FY20 Connections Update
10 July 2020
> Lockdown period had a significant impact on Q4 fibre activity and uptake
▪ restrictions on non-essential activity reduced fibre installations by ~15k and halted UFB2 rollout
▪ reduced fibre installations and constraints on door to door marketing saw Q4 fibre connection growth drop to 27k from 32k in Q3
▪ Chorus provided $5 million financial support to service companies to assist with reduced field force workflow/revenue and help retain workforce for rapid resumption of work in Alert Level 3
> Total fixed line connections declined by 4k to 1,415,000* (Q3 FY20: -13k)
> Broadband connections returned to Q2 level of 1,206,000*, with 4k growth (Q3 FY20:-4k)
*totals exclude 10,000 free broadband connections provided to student households
10 July 2020
Q4 FY20 overview
Q4 FY20 CONNECTIONS UPDATE2
COVID-19 constrains Q4 fibre growth
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
July Aug Sept Oct Nov Dec Jan Feb Mar April May June
Fibre installations (NZ wide)
FY18 FY19 FY20
> We’ve implemented a broad range of initiatives to support community and industry including:
▪ providing 10,000 broadband connections, free-of-charge for six months, to families without broadband as part of government initiatives for online schooling
▪ enabling temporary disconnections by removing disconnection and reconnection fees for businesses
▪ making a $2 million relief fund available to retailers for debt incurred from consumers and small businesses unable to pay their connection bills during the lockdown period
▪ introducing price reductions on our 1Gbps and small business plans from 1 July
▪ delaying our annual CPI increase until 1 October and limiting increases to selected fibre plans, despite increases to our service company and other costs
▪ continuing to invest in broadband capacity as network demands change post-lockdown
> It remains to be seen what impact wider COVID-19 economic effects will have on connections in the coming months
10 July 20203
Our response to COVID-19
Q4 FY20 CONNECTIONS UPDATE
UFB uptake reaches 60%
> UFB uptake increased from 58% to 60% within completed footprint in Q4
▪ uptake in UFB1 areas grew from 60% to 63%
▪ uptake in UFB2 areas grew from 35% to 37% (note: uptake includes some UFB2 areas that have been partially built, but not yet submitted for Crown sign-off)
▪ 725,000 connections (Q3: 695,000) now within completed footprint, including business premium connections
▪ 1,209,000 customers able to connect (Q3: 1,198,000)
▪ 931,000 premises passed* (Q3: 920,000) out of 1,054,000 target = UFB rollout 88% complete
> 31,000 fibre installations completed in Q4 (Q3: 38k)
▪ customer satisfaction increased from 7.9 to 8.1
*under the UFB contract, a multi-dwelling unit or single office block is one premises
Uptake
10 July 2020 Q4 FY20 CONNECTIONS UPDATE4
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
ADSL VDSL Fibre
Fibre now 73% of Chorus broadband connections in planned UFB zone
No. of connections
0
200000
400000
600000
800000
1000000
1200000
1400000
30-Jun-19 30-Sep-19 31-Dec-19 31-Mar-20 Jun-20
10 July 2020
30 June 2019
30 Sept 2019
31 Dec 2019
31 March 2019
30 June 2020
Unbundled copper (no broadband)
24,000 21,000 18,000 17,000 15,000
Baseband copper (no broadband)
214,000 201,000 192,000 185,000 179,000
Copper ADSL (includes naked)
327,000 304,000 283,000 261,000 245,000
VDSL (includes naked)
270,000 257,000 242,000 228,000 221,000
Fibre broadband (GPON)
599,000 645,000 681,000 713,000 740,000
Data services (copper)
5,000 4,000 4,000 4,000 4,000
Fibre premium (P2P)
11,000 12,000 12,000 11,000 11,000
Total connections 1,450,000 1,444,000 1,432,000 1,419,000 1,415,000
Fibre (GPON)
VDSL
Copper ADSL
Unbundled copper
Baseband copper
Fibre now makes up 53% of Chorus connections
Q4 FY20 CONNECTIONS UPDATE
> 1,206,000 broadband connections comprises:
▪ 740,000 fibre (GPON) connections
▪ 466,000 VDSL/ADSL (copper) connections
Business premium
5
Note: Free education connections are excluded from this data
27,000 mass market fibre connections added
▪ 1Gbps connections grew from 105k to 115k and now represent 16% of mass market fibre
▪ about 20% of orders are for 1Gbps
▪ 100Mbps plans reduced to 69% share of connections
▪ small business plans grew to 3k; 100Mbps business plan reduced from $55 to $52 from 1 July
0
10
20
30
40
50
60
70
80
90
100
Jun-19 Sep-19 Dec-19 Mar-20 Jun-20
% of plans
Total mass market fibre uptake by plan type
50Mbps
100Mbps
1Gbps
10 July 2020
1Gbps plans grow to 115k
200Mbps
Q4 FY20 CONNECTIONS UPDATE
$60 p.m.
$46 p.m.
$42.50 p.m.
$55 p.m.
Business/Education plans
6
-10
0
10
20
30
50Mbps 100Mbps 200Mbps 1Gbps
Fibre plan movement by quarter
Q1 Q2
Change in connections (‘000s)
$56 p.m.from 1 July
$43.56 p.m. from 1 Oct
$47.15 p.m. from 1 Oct
$56.38 p.m. from 1 Oct
10 July 2020
Connection changes by Zone (indicative)
Chorus UFB zone*
Rural (non-UFB) zone
Local Fibre Company UFB zone
Total connections at 30 June**
1,097,000 195,000 108,000
Broadband connections 980,000 155,000 71,000
Copper (no broadband) connections
117,000 40,000 37,000
* Includes planned UFB1, 2 and 2+ coverage**Excludes 15k fibre premium and data services (copper) connections
Q4 FY20 CONNECTIONS UPDATE7
8
3
7
16
1
1
-4
-8
-7
-7
-5
-5
-8
-11
-1
-1
-2
-2
-2
-2
-2
-3
-15 -5 5 15
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Broadband connections
Copper (no broadband) connections
LFC Zone
Rural Zone
Chorus UFB Zone
N/C
Change in connections (‘000s) by zone**> Chorus UFB zone: 8k broadband growth despite
lower fibre installation volumes due to COVID-19 limitations on non-essential work
> LFC zone: slowdown in broadband disconnects through lockdown period
> Rural: VDSL and fibre connections continued to grow, offsetting ADSL reductions. Fibre connections now 20k
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
Sep-19 Dec-19 Mar-20 Jun-20
% uptake relative to capable addresses
UFB1 uptake: 63%
Q4 FY20 CONNECTIONS UPDATE8 10 July 2020
Average uptake
Data usage returns to pre-lockdown growth path
> monthly average data usage per connection on our network reduced to 313GB in June, down from 346GB (March)
▪ 387GB on fibre (March:429GB)
▪ 198GB on copper (March:225GB)
> Q4 data usage was artificially lower (~10%) because international streaming providers have constrained their bandwidth delivery in response to COVID-19 effects on some telco networks
> April data usage (not shown on chart) was significantly higher because it reflected the effect of Alert Level 4 lockdown
▪ average: 406GB
▪ fibre: 495GB
▪ copper: 273GB
10 July 2020
200
225
198
363
429
387
293
346
313
0
50
100
150
200
250
300
350
400
450
Dec-1
4
Mar-
15
Jun-1
5
Sep-1
5
Dec-1
5
Mar-
16
Jun-1
6
Sep-1
6
Dec-1
6
Mar-
17
Jun-1
7
Sep-1
7
Dec-1
7
Mar-
18
Jun-1
8
Sep-1
8
Dec-1
8
Mar-
19
Jun-1
9
Sep-1
9
Dec-1
9
Mar-
20
Jun-2
0
Copper Fibre Average
Data usage (GB)
Monthly average data usage per connection on our network
Q4 FY20 CONNECTIONS UPDATE9
10 July 202010
Video meetings drive ‘new normal’ of higher upstream traffic
> upstream traffic peaked ~60% higher (than January levels) when lockdown began, driven by rapid adoption of video conferencing applications
> upstream traffic remains 10% higher than pre-lockdown, reflecting ongoing adoption of work from home practices and two-way bandwidth hungry applications
LOCKDOWN PERIOD
> downstream traffic initially peaked ~40% higher (than January levels) when lockdown began
> downstream traffic dipped in the first week of lockdown as streaming providers limited streaming quality
Q4 FY20 CONNECTIONS UPDATE
% c
han
ge f
ro
m J
an
uary t
raff
ic level
Upstream traffic remains 10% higher than pre-lockdown levels
10 July 202011
Video meetings create Godzilla effect
Upstream traffic spikes half hourly, consistent with meeting start times
Q4 FY20 CONNECTIONS UPDATE
10 July 202012
Commerce Commission report notes strong fixed line performance
> The Measuring Broadband New Zealand report for May 2020 noted:
▪ on average, fixed line broadband(ADSL/VDSL/fibre) connections experienced no significant drops in download speed during the first week of lockdown.
▪ average download speeds for fixed wireless plans decreased by around 25%.
▪ 90% of latency tests performed through fibre connections were below 20ms. By comparison, 96% of Fixed Wireless latency tests were above 30ms.
www.measuringbroadbandnewzealand.com/
Source: Measuring Broadband New Zealand, Autumn Report, May 2020
Q4 FY20 CONNECTIONS UPDATE